Air Products disclosed plans to deconsolidate its NEOM green hydrogen joint venture when the facility begins operations by June 30, 2027. The accounting change will remove billions in project assets and liabilities from the industrial gas supplier's consolidated balance sheet.
The NEOM project carries a total capital cost of $8.4 billion. Air Products holds a 33.3% equity stake alongside partners ACWA Power and Saudi Arabia's NEOM development company. Each partner owns an equal share of the venture.
Deconsolidation occurs when a parent company loses control of a subsidiary or joint venture. The entity shifts from full consolidation to equity method accounting. Air Products will record only its proportionate share of the JV's net income rather than including all assets and liabilities on its balance sheet.
The facility will produce 650 tons of green hydrogen per day using 4 gigawatts of renewable energy from solar and wind sources. The hydrogen feeds an onsite ammonia production unit for easier transport to global markets. ACWA Power manages plant operations while Air Products supplies the technology and will offtake the green ammonia for distribution.
The project's operational start date positions it among the first mega-scale green hydrogen facilities globally. Commercial production depends on completing the electrolyzer installation and renewable energy infrastructure across NEOM's 26,500 square kilometer development zone in northwest Saudi Arabia.
Air Products' equity investment totals approximately $2.8 billion based on its one-third ownership. The deconsolidation will improve the company's debt-to-equity ratio by removing $5.6 billion in project debt from consolidated statements. Analysts expect the accounting shift to enhance Air Products' financial metrics without changing its economic exposure to the venture.
The company disclosed the expected deconsolidation timing in its Q1 2025 earnings materials. Management cited the JV structure and operating agreements as factors triggering the accounting treatment change upon commercial operation. Air Products maintains similar joint venture structures for other large-scale hydrogen projects in development.